The Risk of Not Innovating May be Greater Than the Risk of Innovating
In deciding whether it is a strategic advantage to Innovate or not, it is also important to recognize the risks. We believe you can ask yourself three questions that will help view risk in terms of innovation:
- Is it strategically important that your business Innovate to protect it’s future?
- What is your history of innovation?
- A risk is measured in cost and resources. Will the costs be overshadowed by the gains?
Innovation is not an island on its own.
Innovation must be a strategic initiative and delivering quantifiable value.
Let’s look at innovation more deeply from a risk point of view. The risk of an innovation program is that you will be spending money and taking key people from other positions. There is also a risk that the value of your innovations will not meet expectations. The risk of not innovating is that a competitor may innovate a competing product that subsequently damages your business.
It is worthwhile to look at innovation from a risk mitigation point of view. That is where a strategy around innovation comes into play and an efficient innovation program becomes important. You innovate quickly by accelerating to your failures and learning from them.
There is also a risk of doing innovation poorly. These are other risk areas that are unique to innovation:
Innovation Risks
Risks of not innovating
Risks of doing innovation wrong
Risk mitigation
First, Let’s Review Risks of Innovating
Innovation does not just happen, it takes an effort. The good news is that the effort is relatively small but it must be somewhat ubiquitous. So there is a cost. Innovating may also take the eye off other important business strategies. It is also a sexy area so it may attract the best and the brightest from other areas.
First, Let’s Review Innovation Risks
Innovation does not just happen, it takes an effort. The good news is that the effort is relatively small but it must be somewhat ubiquitous. So there is a cost. Innovating may also take the eye off other important business strategies. It is also a sexy area so it may attract the best and the brightest from other areas.
Risks of not innovating
Treacy and Wiersema wrote a wonderful book that chronicled profiles of the best businesses. They determined that the best businesses either focused on Operational Excellence, Customer Intimacy, or Innovation. The very best companies focused in two or three of these areas. If you do not create a business competitive advantage by focusing on Operational Excellence then that only leaves Customer Intimacy if you ignore Innovation. What is the core focus of your business?
Risks of Doing Innovation Wrong
It is difficult to do innovation totally wrong. You can even do it through brainstorming or brainwriting sessions. I suggest you watch this video that discusses these methodologies:
Risk Mitigation
I recommend using the same Innovation Methodology that they use in Silicon Valley. Firstly, in Silicon Valley, you will not get Venture Capitalist funding and less you demonstrate you use this innovation technology. If it’s good enough for Silicon Valley, it should be good enough for you.
In Conclusion
Innovation represents one third of the strategic business directions to greatness. Whereas, the Silicon Valley methodology is powerful, there are other supporting technologies existing in Lean Six Sigma such as Design of Experiments:
Good luck on your Innovation efforts and don’t worry too much about the risks.